Stablecoin Compliance and Institutionalization (Issue 1 · Week 29, 2026)

01Event Overview

On July 11, 2026, Circle received authorization from the OCC to establish a national trust bank, marking a shift in the competition over stablecoins toward control over infrastructure under federal regulation. On the same day, Circle faced criminal charges in Wisconsin and New York for refusing to freeze $380,000 in fraudulent assets, sparking intense debates over compliance and technical architecture. Faced with the $33 trillion annual transaction volume generated by stablecoins, banking giants such as JPMorgan Chase joined forces to create a tokenized deposit network in order to defend their market positions in payments.

02Course of the incident

• [2026-07-08] Risks emerge in the stablecoin lending sector: Goldfinch lost $56 million in assets due to inadequate off-chain risk controls, exposing the pitfalls of on-chain lending.
• [2026-07-09] PayPal partners with Polygon to upgrade the PYUSD infrastructure, targeting the $2.6 trillion cross-border payment market and competing with USDC by leveraging its compliance advantages.
• [2026-07-10] Wisconsin and New York state file criminal charges against Circle for refusing to freeze $380,000 in fraudulent assets, triggering a crisis regarding stablecoin compliance.
• [2026-07-11] After half a year of preparation, a compliance-focused blockchain project gains market attention after an incident involving a cat results in a $200 million market value surge.
• [2026-07-12] Circle receives final approval from the OCC to establish a national trust bank; its stock rises by over 10% pre-market, signaling that the core competition in stablecoins is shifting toward control over infrastructure under federal regulation.
• [2026-07-14] JPMorgan downgrades Coinbase’s rating, citing its 90% revenue-sharing agreement with Hyperliquid and declining USDC circulation, which forces issuers to sacrifice profits to maintain market share.
• [2026-07-15] Circle’s 2025 financial report shows that $1.4 billion in costs related to Coinbase payouts consumes more than half of its revenue, highlighting how platform competition is reshaping the profitability model of stablecoins.
• [2026-07-15] Faced with $33 trillion in annual stablecoin transaction volume, giants like JPMorgan join forces with TCH to create a tokenized deposit network, aiming to replicate the Zelle model as a countermeasure.

03Impact Analysis

Impact Analysis

Market Price Dimension The price of USDC remained at $0.9998, with a 7-day volatility of -0.0%, indicating that market confidence in its stability as a currency anchor has not been significantly disrupted by short-term regulatory tensions. However, changes in the profit model have led to disagreements among institutions regarding valuations. On July 15, 2026, JPMorgan downgraded Coinbase’s rating, arguing that its 90% revenue-sharing agreement with Hyperliquid and the declining circulation of USDC are forcing the issuer into a prisoner’s dilemma where it must sacrifice profits to maintain its market share. Although Circle’s stock rose by over 10% before the close following news of federal trust approval, its 2025 financial reports showed that Coinbase’s distribution costs of $1.4 billion consumed more than half of its revenue, with high channel fees continuing to suppress long-term valuation prospects.

Regulatory Response Dimension On July 12, 2026, Circle received final approval from the OCC to establish a national trust bank, marking a shift in the competition around stablecoins from token issuance volume to control over custody and settlement infrastructure under federal regulation. However, this license is limited to custody services only; it does not allow for deposit-taking or lending, and reserve management functions are not yet available, meaning regulatory constraints remain strict. Meanwhile, on July 9, 2026, Wisconsin and New York state filed criminal charges against Circle for refusing to freeze fraudulent assets, sparking intense debates over the technical architecture of stablecoins and their legal obligations, and highlighting the deep conflict between decentralized characteristics and judicial seizure orders.

Ecosystem Impact Dimension Traditional financial giants are accelerating their countermeasures. Faced with the $33 trillion annual transaction volume generated by stablecoins, institutions such as JPMorgan, together with TCH, established a tokenized deposit network on July 15, 2026, in an attempt to replicate the Zelle model and defend their market share in payments. BlackRock, through its BUIDL bond tokenization initiative and Aladdin risk management system, is shifting from using ETFs as a lure to taking control of on-chain collateral and pricing power, thereby building an underlying operating system for the crypto world. In the payment sector, PayPal partnered with Polygon on July 9, 2026, to upgrade the PYUSD infrastructure, targeting the $2.6 trillion cross-border market and competing with USDC by leveraging its compliance advantages. Although OUSD has the support of 150 institutions, Ark Invest believes it will struggle to challenge the dominance of USDT and USDC, as the barriers posed by network effects are difficult to overcome.

04Subsequent focus areas

Key Monitoring Points

1. Progress of Circle’s trust banking operations
   Circle received approval from the OCC to establish a national trust bank on July 12, 2026, but disclosed on July 14, 2026, that it only possesses custody rights without current deposit, lending, or reserve management capabilities. It is necessary to track the actual timeline for these services to go live. If it fails to expand into deposit, lending, or reserve management by the end of 2026, it will validate the failure of the “infrastructure control” narrative, potentially leading to stock price corrections.

2. Coinbase’s revenue-sharing agreement and the impact on USDC circulation
   Data from July 15, 2026, showed that over half of Circle’s revenue in 2025 was consumed by Coinbase’s $1.4 billion in distribution costs. On July 14, 2026, JPMorgan noted that a 90% revenue-sharing ratio contributed to a decline in USDC circulation. Warning threshold: If USDC circulation declines week after week for two consecutive periods without Coinbase adjusting the share ratio, it will intensify the “prisoner’s dilemma,” forcing issuers to sacrifice profits in exchange for market share.

3. Progress of traditional finance’s tokenized deposit network
   On July 15, 2026, giants like JPMorgan partnered with TCH to build a tokenized deposit network to cope with the annual trading volume of $33 trillion in stablecoins. It is essential to monitor the number of initial institutional participants and the actual settlement scale of this network. If there is no significant increase in trading volume in the second half of 2026, the “Zelle replication” model may fail, further solidifying the dominant position of stablecoin payments.

4. Circle’s compliance and legal risk exposure
   On July 9, 2026, Wisconsin and New York states filed criminal charges against Circle for failing to freeze $380,000 in fraudulent assets. It is important to track the progress of these cases and the severity of regulatory penalties. If there are substantial criminal convictions or heavy fines by the end of 2026, it could undermine Circle’s status as a “compliance leader” and affect the trust of institutional clients.

5. Penetration rates of BlackRock’s BUIDL and Aladdin systems
   On July 15, 2026, BlackRock is using BUIDL and Aladdin to gain control over on-chain collateral and pricing power. It is necessary to monitor the growth of BUIDL’s tokenized Treasury bond portfolio and the number of institutions using Aladdin for crypto asset management. If the growth rate falls short of expectations, it will weaken the support for BlackRock’s narrative of building an “underlying operating system.”

05Related Reads

1. “Circle获得联邦信托许可：稳定币竞争从发行转向基础设施掌控”
2. “拒绝冻结38万美元反遭刑事指控，稳定币合规危机爆发”
3. “万亿级稳定币带来压力，美国银行业联手打造Zelle式产品反击”
4. “月息过亿却最终崩盘：稳定币信贷领域的万亿级陷阱”
5. “2.6万亿美元的支付市场：PayPal借助PYUSD实现突围”
6. “90%的收益分成协议引发囚徒困境：Coinbase的利润被Hyperliquid蚕食”
7. “USDC供应量居首但利润却被侵蚀：Circle付出的14亿美元代价”
8. “Circle获得联邦信托牌照：可托管资产但无存贷业务权限”
9. “BlackRock秘密展开掌控：从ETF诱饵到区块链底层操作系统”
10. “150家机构联合也难以打破双寡头格局：为什么币安要放弃利息差？”